Prosecutors Accelerate Investigation into 'Daejangdong 5 Billion Club'... Financial Sector Targeted

by Kim HyeongMin

Published 17 May.2023 10:02(KST)

The prosecution, investigating the overall suspicion of the Daejang-dong '5 Billion Club,' has launched a forced investigation targeting the financial sector. They secured materials by conducting multiple raids on financial institutions and related personnel involved in the interests surrounding the 'Seongnam-eu Tteul' consortium of the Daejang-dong team.

Seoul Central District Prosecutors' Office, Seocho-gu, Seoul. Photo by Jinhyung Kang aymsdream@

According to the legal community on the 17th, the Anti-Corruption Investigation Division 1 of the Seoul Central District Prosecutors' Office (Chief Prosecutor Eom Hee-jun) conducted a raid the previous day on the residence of Lee Soon-woo, former president of Woori Bank, in connection with the 5 Billion Club suspicion involving former special prosecutor Park Young-soo.

Former Special Prosecutor Park is accused of receiving promises of land and commercial buildings worth about 20 billion KRW as a reward for supporting the formation of the 'Daejang-dong team' consortium and delivering project financing (PF) loan solicitations while serving as chairman of Woori Bank's board during 2014-2015, when private entrepreneurs including Kim Man-bae were preparing to bid for the Daejang-dong project (charges include bribery under the Act on the Aggravated Punishment of Specific Economic Crimes).

Woori Bank initially considered participating in the Seongnam-eu Tteul consortium of the Daejang-dong team but withdrew in March 2015 citing internal company regulations. Instead, it submitted a letter of intent for credit amounting to 150 billion KRW to participate in the PF loan.

The prosecution believes that former Special Prosecutor Park, who colluded with the Daejang-dong group, was involved in this background. Former Bank President Lee served as Woori Bank's president from 2011 to 2014. This raid is understood to be aimed at confirming the route through which the private entrepreneurs' solicitations were conveyed to the real estate and finance department staff via former Special Prosecutor Park and former Bank President Lee.

On the same day in the afternoon, the Anti-Corruption Investigation Division 3 of the Seoul Central District Prosecutors' Office (Chief Prosecutor Kang Baek-shin) dispatched prosecutors and investigators to the residence of former Hana Financial Group Chairman Kim Jung-tae to secure materials related to the suspicion of 5 billion KRW bribery involving former People Power Party lawmaker Kwak Sang-do and his son Byung-chae.

This is the first raid on former Chairman Kim since the prosecution began the 'Daejang-dong investigation' in September 2021.

The prosecution suspects that former lawmaker Kwak received 5 billion KRW (2.5 billion KRW after tax) from major shareholder Kim Man-bae in the form of his son's retirement pay and other names as a reward for preventing the collapse of the Seongnam-eu Tteul consortium, which Hwacheon Daeyu Asset Management participated in, in 2015.

In the 2015 Daejang-dong development project bidding, three groups applied: the Seongnam-eu Tteul consortium, the Korea Development Bank consortium, and the Meritz Securities consortium. During this process, Hoban Construction, part of the Korea Development Bank consortium, pressured Hana Bank to leave Seongnam-eu Tteul and join their project. However, former lawmaker Kwak, who was asked by Kim, is believed by the prosecution to have exerted influence on Hana Bank to prevent this.

The first trial court in former lawmaker Kwak's case judged that "it is reasonable to see that Chairman Kim Sang-yeol proposed to former Chairman Kim that the Korea Development Bank and Hana Bank form a single consortium and provide Seongnam Urban Development Corporation with a smaller profit so that the consortium could gain more profit."

However, the court also stated, "It is difficult to conclude that there was a crisis of Hana Bank leaving the consortium, and it is hard to see that former lawmaker Kwak actually exerted influence on Hana Financial Group," and acquitted Kwak of charges of mediation of bribery and bribery.